Construction to begin on Louisiana cane refinery

November 20, 2009
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by Ron Sterk

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SUGAR LAND, TEXAS – With formation and funding of a three-way joint venture between Imperial Sugar Company, Cargill, Inc. and Sugar Growers and Refiners, Inc. completed, construction of a sugar refinery in Gramercy, Louisiana, next to an existing Imperial plant, is expected to begin immediately.

The joint venture, Louisiana Sugar Refining, LLC, (L.S.R.) with one-third ownership by each company, closed financing agreements totaling $145 million to provide construction and working capital financial for the project, Imperial said. The funding will support the $100 million in tax exempt Gulf Opportunity Zone Bonds issued by the Parish of St. James, La. Each member agreed to contribute $30 million in cash or assets as equity to capitalize the venture. Imperial said its contribution would occur in three stages, consisting of the existing refinery assets, valued at $22 million, including about 207 acres of land.

“Construction of the refinery will begin immediately,” said Lonnie Champagne, chief executive officer of Sugar Growers and Refiners. “We expect that the new facility will commence operation in the first half of 2011.”

The existing Imperial refinery will be operated by Imperial for its own account until Dec. 31, 2010, during which time certain improvements estimated at $6 million must be completed. The facility will run during the construction and start-up phases of the new plant, which Imperial estimated at 18 to 24 months.

After Jan. 1, 2011, Imperial will continue to run a small bag packaging operation in the existing plant, with refined bulk sugar purchased from L.S.R. under a long term, market-based supply agreement, Imperial said.

“This transaction enables Imperial to retire its existing refinery with dated technology for a share of the new state-of-the art refinery without a significant capital outlay by Imperial,” said John Sheptor, president and C.E.O. of Imperial. “This joint venture secures a source of raw sugar and assure the viability of refining operations in Gramercy for generations to come.”

Raw cane sugar will be provided under an evergreen supply agreement to L.S.R. by Sugar Growers and Refiners, a Louisiana marketing cooperative representing eight sugar cane mills and about 700 growers, which markets about 800,000 tons of raw sugar annually. Cargill will market the refined sugar, except for material sold to Imperial.

“The new facility will be good for the long-term viability of the sugar industry,” said Alan Willits, president of Cargill Corn Milling.

When completed, the new sugar refinery will be the largest in the United States, L.S.R. said.

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